Hospitals Shift Business Plans For Waning Economy, Changing Government Policies

A sluggish economy, changing government regulation and court cases have prompted new business strategies at hospitals, according to news reports.

The Daytona Beach News-Journal: A Florida community that a decade ago had five hospitals will only have two, if Florida Hospital and Bert Fish Medical Center merge as planned at the end of the month. "The hospital industry -- similar to the banking industry -- is finding that mergers are the way to go, according to Aaron Liberman, a professor of health care administration at the University of Central Florida. He predicted more merger mania in years to come because of the increasing costs of health care -- and the government's desire to decrease insurance companies' power in the health care equation" (Geggis, 6/20).

In a separate article, the Daytona Beach News-Journal reports, Bert Fish Medical Center is also seeking "an exemption from the law requiring the medical center provide a portion of the property taxes it collects for indigent health care to the city's redevelopment efforts." The hospital is arguing that it should not have to contribute to redevelopment efforts because any contribution would take away from funding for caring for the poor (Johnson, 6/21).

Rockford (Ill.) Register Star: Illinois hospitals are eyeing a decision by the state's supreme court that a major medical center did not provide enough charity care to maintain its property tax exemption. "The 3-2 ruling issued in March - two justices did not participate in the decision - could have implications for every health care organization in the country as states and health systems debate the best way to measure charity care against tax exemptions." The justices said the hospital in their case, Prevena Covenant Medical Center in Urbana, needed to spend more on charity care than the 0.7 percent of revenues it shelled out, but didn't set a threshold for keeping nonprofit status. Most hospitals in the state only spend 1 to 2 percent. The health overhaul could change this dynamic by decreasing the number of insured people (Westphal, 6/19).

The Keene (N.H.) Sentinel: Meanwhile, hospitals continue to provide an "economic salve" in hard times as major employers in their communities. "Hospitals in [the Keene] area already serve a dual role. Along with healing the ill and saving lives, they serve as financial arteries, pumping money into the local economy." Cheshire Medical Center/Dartmouth-Hitchcock Keene employs 1,400 for instance, making it one of the biggest employers in the area (Greisman, 6/19).